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Screen K1 - Schedule K-1, 1065 / 1120S - General Information (1040)
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Unit
The next available number defaults in this field. You can overwrite the data in this field (this won't re-order the K1 unit), but you can't leave it blank. This information is used to gather and coordinate information for the business unit activity. For example, these fields enable information (such as income or loss, sales, credits, and asset detail) to be linked for the basis, at-risk, and passive calculations.
note
Unit #999 is reserved for its own use for section 179 pass-throughs. To avoid incorrect expense allocation, don't use
999
as the unit number for Schedule K-1 input.T, S, J / EIN
Select the taxpayer or spouse code and employer's identification number in the corresponding fields to share financial and non-financial data to and from the K1 screen. Data can't be shared if either of these fields are blank or if
J
is selected in the T, S, J
field.Name of entity
The entity name in this field is used as the unit description. This field must contain data for Schedule K-1 to process data.
State
Enter the 2-character postal code for the state to which this unit belongs. The various state applications use this code to help determine in-state and out-of-state amounts. Note that you must enter a postal code for state processing to work properly.
Type of entity
The code you select here determines the type of entity on Schedule E, Page 2. Select
3
to mark the foreign partnership boxes on Schedule E, Page 2. Select 4
to determine the entity's tax treatment as a Publicly traded partnership. This code supersedes the passive activity code entered later in the K1-2 screen.Final Schedule K-1
Enter
X
if the Schedule K-1 received by the partnership or S Corporation was marked as the final K-1. When this field is marked, the K1 unit won't proforma to next year unless there are passive credit carryovers or the entity was a passive activity disposed on installment basis and carryovers exist.Type of partner
Select the type of partner. If this field is blank, the partner defaults to a general partner or LLC member-manager. When
2
- Limited or other LLC member is selected, the calculation of net earnings from self-employment excludes separately stated items for section 179 expenses, unreimbursed partner expenses, auto expenses, amortization, depreciation, depletion, home office expenses, debt financed acquisition interest, and other expenses. This treatment is in accordance with the Schedule SE instructions and the partner's Schedule K-1 instructions.Use this unit as main unit for combining units of same entity into 1 basis worksheet
By default, K1 units with the same EIN and TSJ code will combine basis information into one worksheet. Only the K1 entity with the lowest unit number is used. When a Schedule K-1 contains more than 1 activity, you can make separate activity units to provide for various limitations. The income and losses from each activity are combined on 1 Basis Worksheet for the entity. Losses are allocated to the activities with losses.
note
When there are two or more 1065/1120S Schedule K-1s from 1 entity, each unit is combined into 1 Partner’s / Shareholder’s Basis Worksheet. Per Revenue Ruling 84-53, the IRS ruled that a partner holding more than 1 partnership interest in a partnership has a single, aggregated adjusted basis in those interests. This rule applies regardless of whether the partner holds general interest, limited interest, or any combination of general and limited interest.
Qualifies for section 1202 exclusion
To qualify for the section 1202 exclusion from a pass-through entity, the shareholder/partner must have held the interest on the date the pass-through entity acquired the qualified small business stock and at all times thereafter until the stock was sold. Enter
X
in this field to indicate the shareholder/partner qualifies to take the exclusion. Because the qualified small business stock gain isn't included in the Net long-term capital gain(loss)
field, the entire section 1202 gain reports on Form 8949, Part II, Box F. When this field is marked, the section 1202 exclusion will report the appropriate adjustment on Form 8949, Part II, Box F, line 1, column g.Form 2555 share of gross foreign earned income / expenses
Enter the partner's share of gross foreign earned income and expenses for Forms 2555 and/or 1116. See “Partner’s Share of Foreign Earned Income and Expenses” for more details. The 1116, 2555, and 2555-2 screens require additional information to report this activity on Forms 1116 and/or 2555. Please refer to those applicable screens for further information.
Enter the partner’s share of foreign earned income and expenses on the K1 screen in the Form 2555 share of gross foreign earned income/expenses statement. Additional information on the statement fields is as follows:
- Code: Select the code that represents the appropriate allocation of the entity's foreign earned income and operating expenses, or use the fieldview to make your selection.
- Foreign Income Type: Enter the type of income for this entity. This reports on Form 2555, Page 2, line 20b as required.
- Partnership Name if Different: Enter the partnership name, if different than the entity name in the K1 screen. This information reports on Form 2555, Page 2, line 20b.
- Share of Foreign Earned Income: Enter the partner's share of partnership gross foreign earned income. This amount reports on Form 2555, Page 2.
- Share of Foreign Expenses: Enter the partner's share of partnership expenses directly related to foreign earned income. This amount reports as a deduction allocable to excluded income.
note
If you use the
Allowable share of income for personal services in partnership (Force)
field in the 2555-2 screen, the statement information doesn't report on Form 2555, Page 2, line 20b.The Form 2555 Allocation Worksheet reports the allocation between U.S. and foreign earned income. The Form 2555 exclusion calculation uses income calculated as foreign earned during the assignment. Form 1116 reports foreign earned income less any applicable exclusion as eligible for the foreign tax credit. This activity's allocation code is used to allocate any related self-employment items.
State calculation - use state income as limited on Schedule E, page 2
Enter
X
to use state income as limited by Federal limitations on Schedule E, page 2, which adjusts state amounts for basis, at-risk, and passive losses. When not marked, state amounts in the State, if different
fields transfer to the applicable state's AGI Worksheet with no Federal limitation adjustments. This field proformas from year to year.State use code
In the statement, enter the applicable state use code for processing the 1040 state return and the appropriate ID number for the state return selected.
Code | Description | State number |
|---|---|---|
1 | Form OP-424: CT | Enter 7-digit SOS ID number. |
2 | Form IT-204-LL: NY | State number isn't applicable. |
3 | Form 568: CA | Enter the 7, 9, 10, 11 or 12 digit SOS file number. If no number has been assigned, enter None , None 1 , etc. |
4 | FAE 170: TN | Enter Tennessee account number. If no number has been assigned, enter None , None 1 , etc. |
5 | Form 725: KY | Enter Kentucky 6-digit LLC account number. |
7 | Form 05-158: TX | Enter 10-digit SOS file number. |
8 | Tax identification number: HI | Enter Hawaii general/excise use 12-digit tax identification number. Don't include letters or dashes. |
10 | Qualified oil & gas activity: MI | State number isn't applicable. |
11 | Personal service income: SC | State number isn't applicable. |
12 | Form PPT: AL | Enter 6-digit SOS file number. |
13 | Form RI-1065: RI | Enter 9-digit SOS ID number. |
15 | Form LLC Annual Report: MA | Enter the 9-digit ID number assigned by the Secretary of Commonwealth. |
16 | LLC Franchise Tax Report: AR | Enter the 9-digit Arkansas filing number. |
17 | Form MTA: NY | State number is not applicable. |
18 | Qualifies for pass-through entity reduced tax rate: OR | State number isn't applicable. |
19 | Forms PHL NPT/BIRT: PA | Enter the 7-digit Philadelphia account number. |
20 | Schedule CT-EITC: CT | Enter 10- to 13-digit state Tax ID number. |
21 | Schedule DE: WI | State number isn't applicable. |
note
Michigan Note:
The Michigan Oil and Gas WorksheetNet includes profit from the activity. The MI-1040 Schedule 1 includes total amounts from the Michigan Oil and Gas Worksheet.To activate CA, KS, KY, MA, NC, NY, PA, TN, and TX LL/LLC returns, select
File
, Client Properties
, the state tab, and mark the checkbox for the form/return in the Other return(s)
group box.City code / name
Enter the 3-character code for the city where the activity is located. Various tax applications use this code to determine in-city and out-of-city income. When you select a city code, the
City name
field fills automatically.note
For Yonkers returns, enter
YON
to allow net earnings (loss) from self employment to transfer to Form Y-203. Enter amounts for Form Y-203 related to this unit in the K1-4 screen.Community property designation
If the taxpayer is married, files a separate federal return, and resides in 1 of the following community property states - AZ, CA, ID, LA, NM, NV, TX, WA, or WI (or for registered domestic partners, files a Single or Head of Household federal return, and resides in CA, NV, or WA) - use this field to identify whether or not the Schedule K-1 income/loss is generated from community property. By default, if this field is blank, it is treated as community property, and an entry of
N
is treated as non-community property (i.e. separate property). Sch K-1 units indicated as community property will be allocated 50/50 to the taxpayer and the spouse when 2 separate clients are created via the Filing Status Optimization utility with the Split income according to Community Property rules option enabled.note
- This field is disabled if a community property state return isn't attached or the taxpayer's primary residence indicated on the 1040 screen isn't a community property state.
- Self-employment earnings (loss) information entered on the K1-4 screen won't split 50/50 to the taxpayer and spouse, unless the Sch K-1 activity is coded J, or the return is being prepared for a domestic partner. Per IRS Publication 555, Community Property, all of the distributive share of a married partner's income or loss from a partnership is attributable to the partner for calculating self-employment tax, even if a portion of the partner's distributive share of income or loss is community income or loss that is otherwise attributable to the partner's spouse for income tax purposes.
- Any entry in this field will proforma to all subsequent years, if applicable.
- The Keogh screen won't split 50/50 when performing a community property split.